Fact 1: AEC Proposal Activity Slows in Many Markets While Some Markets Thrive. While AEC professionals navigate volatile market conditions, there will clearly be winners and losers when the dust settles. PSMJ Resources, Inc. latest AEC Quarterly Market Forecast report provides much-needed clarity on where markets are heading this year by tracking changes in proposal activity. The survey tracks the increase or decrease in proposal activity over 12 major client markets and 57 client submarkets. The latest report (with data collected in late March and early April) showed a sharp decrease in proposal activity in markets such as environmental, where there is a big push for deregulation under the current Presidential administration, while some others are poised for significant growth. Data Centers remain a bright spot with some of the strongest proposal activity since we began tracking this submarket. Another strong one? The manufacturing facilities market has reached its highest proposal activity level since 2022.  

Fact 2: Scenario Planning Is Your Key to Navigating Uncertainty. Given shifts on tariffs, DOGE, equity and bond market upheaval, and general business climate uncertainty, PSMJ has the following strategic recommendations for AEC firm leaders:

1. Take a deep breath - Tune out excess noise, avoid overreacting to crisis-oriented news

2. Strengthen your balance sheet
•Monitor capitalization (equity/employee, equity/revenue)
•Maintain liquidity (current ratio) and solvency (debt/equity ratio)
•Focus on cash flow forecasting

3. Protect profitability
•Manage direct labor multipliers through effective project management
•Monitor utilization rates carefully
•Review non-labor overhead costs, but recognize that most cost-cutting leverage comes from labor

4. Implement scenario planning
•Develop optimistic, probable, and pessimistic revenue scenarios
•Create contingency plans for each scenario
•Identify specific threats, assess probability and severity, and develop mitigation strategies

5. Revisit your strategy
•Update SWOT analysis considering current STEEP trends (Social, Technological, Economic, Environmental, Policy)
•Prepare for downturns in strong markets
•Position for upswings in weak markets
•Keep monitoring market trends and adjust accordingly

Fact 3: New Data Reveals Keys to Effective PM Training. In any market, smart investments in project management process improvement can pay big dividends. Project Managers are the gatekeepers of your firm's profit margins. But, where can you get the best bang for your buck? PSMJ recently surveyed AEC learning and development professionals to see how those who report being most satisfied with their programs are structuring Project Manager training. What topic (other than project management) is most common in the best-in-class programs? Leadership. 91% of respondents who are highly satisfied with their programs report including leadership content in their programs. Need some ideas for what to cover in this area? The best leadership components address communicating change, having difficult conversations with subordinates, and coaching team members on productivity and time management. We'll provide examples of modules we like, and that you can add to your programs, in future 5 in Five issues. 

Fact 4: Get Paid Faster with This Weird Trick! Cash is king. Getting paid faster reduces your firm's working capital requirements, which frees up cash for more investments in growth and innovation. Want a quick tip to go from invoice to cash faster? In your project kick-off meeting with the client, provide a sample invoice for client review. Sometimes, getting an internal client project number on the invoice will get you paid faster. Try it out!

Fact 5: Is the In-Office Push Coming For AEC? If the media hasn't covered the economy lately, they are covering the push for companies to get workers back into the office. The rationales for the push vary from productivity to collaboration. The push is not nearly as pronounced with AEC firms, and PSMJ's latest benchmark data points to a hybrid approach, with three in-office days/ week being the most popular model. 48% of firms report operating under a hybrid model; more than half go with three days/week. 12% are fully in-office, 11% are fully remote, and 29% report that it varies by position (one example is Principals in the office four days/week, while staff are in three days/week). This in-office/hybrid/remote split is consistent with previous PSMJ data on this topic.